S&P 500 ekes out gains, but Dow, Nasdaq drop

NEW YORK (MarketWatch) — The S&P 500 index eked out a marginal gain on Thursday, while the Dow Jones Industrial Average dropped, weighed down by losses for Verizon Communications Inc. and AT&T Inc.

The S&P 500 index
SPX, -0.88%
ended the day fractionally higher at 1,838.13. The benchmark index rose only in two out of six sessions since start of the new year, but is still hovering near its peak reached on Dec. 31.

The number of Americans who applied to receive unemployment benefits in the first week of the new year fell to the lowest level since the end of November. In the week ended Jan. 4, initial jobless claims fell by 15,000 to a seasonally adjusted 330,000, the U.S. Department of Labor said Thursday. That matched the forecast of economists polled by MarketWatch.

Investors are awaiting the official employment figures due to be released on Friday. Setting the tone for Friday’s job data was an upbeat report from Automatic Data Processing, showing that private employers created 238,000 jobs in December, exceeding estimates.

Uber cuts price on some rides

(3:19)

Uber, the taxi-hailing smartphone app that has taken heat for the exorbitant cost of fares when demand is high, is lowering rates in some cities. Douglas MacMillan joins the News Hub. Photo: Uber.

Investors also focused on European Central Bank President Mario Draghi’s relatively dovish tone during the press conference following the central bank’s decision to hold its main interest rate unchanged at 0.25%. The Bank of England also left the rates unchanged at 0.5%. Read the transcript from the live blog here.

Douglas Cote, chief investment strategist at ING Investment Management, said that the current pullback is reasonable and expected, given strong gains in the stock markets in 2013. “The baton has been passed down from the Fed to markets. Consistently good economic news is going to raise the questions of Fed accelerating tapering, which we believe will end by the end of 2014,” Cote said.

“Essentially, fundamentals drive markets: manufacturing, consumers and corporate profits – all of which are growing and bode well for stocks in 2014,” he said. “However, consistent good economic news begets more volatility. Markets will have to get used to higher volatility to be rewarded, as market-friendly quantitative easing is gradually withdrawn.”

Central banks: On Thursday, the Bank of England and the European Central Bank kept interest rates on hold. Janet Yellen, incoming Federal Reserve chairwoman, said in an interview with Time magazine that the U.S. economy would see stronger growth this year.

Movers and shakers: Bed Bath & Beyond Inc.
BBBY, +0.45%
shares fell 12.5% after the retailer reported fiscal third-quarter earnings and trimmed its outlook late Wednesday. Macy’s Inc.
M, +0.73%
jumped 7.6% after the retailer said it would lay off 2,500 workers and close five underperforming stores. Family Dollar Stores Inc.
FDO, -0.24%
shares recouped sharp losses but still closed 2% lower after the discount retailer’s quarterly results missed expectations. Apple Inc.
AAPL, -1.54%
shares fell 1.3% after saying it will try to reach a settlement with Samsung on their long-running patent fight ahead of a new trial that is scheduled to begin in March in California. Chief executives from both companies will meet before Feb. 19 with a mediator following a meeting on Monday to discuss “settlement opportunities.” J.C. Penney Co. Inc.
JCP, +7.41%
climbed 3.7%, recouping some of its 10% loss from the previous session after the firm made veiled comments about its holiday sales. Airline companies added to the previous day’s gains, following an upbeat outlook on the sector from J.P. Morgan. Delta Air Lines Inc
DAL, -1.32%
added 4.2%, United Continental Holdings Inc.
UAL, -1.38%
soared 6.8% while Southwest Airlines Co
LUV, -0.63%
added 2.9%.

In other markets: European stocks finished lower. Asian markets were mostly lower as Japan gave away much of its gains from the previous session, while Chinese data weighed on stocks in China. The euro
EURUSD, +0.05%
weakened against the dollar on Mario Draghi’s comments, while gold prices
US:GCG4
gained, and crude oil fell. Bank of America Merrill Lynch cut its gold forecast by 11% for 2014 to $1,150 an ounce, citing the lack of investor buying as a key concern.

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